UK Election: A Tale Of Two Nations

Yes, it is a tale of two nations, but in a much broader way than you think. Not just England and Scotland, but an equally salient parallel between Great Britain and Canada.

First to the guts of the election: Defying all pollsters, who confidently predicted a hung Parliament, David Cameron’s UK Tories, will now form a majority government again for the first time since John Major managed the feat back in 1992. But it is a majority government predicated on an English majority. North of the border, Scotland handed a spectacular victory to Nicola Sturgeon’s Scottish National party, which wiped out both the Labour Party and Liberal Democrats in the process. It’s a polarization, then, reflecting national AND ideological cleavages.

We’ll leave the full analysis to the British pundits and comment on an interesting Canadian parallel, a parallel which has particularly disturbing implications for the Labour Party. The party again is the left in the position of Official Opposition and, should it wish to avoid that fate again going forward, it might want to consider the fate of Canada’s Liberal Party over the past decade, an increasingly marginalized opposition party that was once the country’s natural party of government.

How did Canada’s Liberal Party manage to dominate its country’s political landscape for so long during the 20th century? The Canadian Liberals basically used to get around 70-75 seats in Quebec (which effectively left them almost half way toward forming a Parliamentary majority). All the Liberals had to do was take Ontario and a few seats in the Maritimes at which point, the Tories and NDP became an irrelevance. This pattern was pretty well established from 1935 until the end of the 1990s (barring a few reversals in the 1950s and 1980s, when the Tories unexpectedly broke the Liberals’ stronghold in Quebec).

But the minute the Quebec separatist movement decided to “federalize” its electoral aspirations and seek seats in the national Parliament in Ottawa (via the “Bloc Quebecois”), this destroyed the Liberals’ power base and prevented the party from winning elections (along with the fact that current Prime Minister Stephen Harper managed to re-unite the right during the latter part of the 1990s).

We now have a comparable situation in the UK: the nationalist bloc - the Scottish National Party - has destroyed Labour’s base in Scotland and made the party more dependent on English support. But much of England’s support has been changeable over the last few decades, and the Tories have sustained a robust core of support (much as Canada’s Tories have done in Western Canada throughout much of the past half century and beyond).

Furthermore, many floating voters in England probably found the idea of a tacit Labour-SNP coalition to be a loathsome idea, and probably broke significantly for the Tories in the last few days. After all, as the FT’s Martin Wolf noted a few weeks ago:

“The price of SNP support for Labour would presumably be precisely what Mr Salmond outlines: fiscal autonomy for Scotland along with fiscal insurance for Scotland by the rest of the UK. Such a one-sided bargain must further aggravate the frustration of voters in the rest of the UK, including Labour voters in relatively poor regions that do not benefit from comparable largesse.”

That said, Mr. Cameron’s speech in the aftermath of the election effectively seems to promise just that: he is offering substantially increased devolutionary powers to Scotland (including taxation) without any apparent change in terms of the grant Scotland receives from the rest of the UK, (which, if maintained, will allow the Scots to sustain higher spending per head than England and Wales, regardless of the revenue it raises).

On the other hand, if the Tories, now free of the constraints of a coalition government with the LibDems, decide to press ahead with more aggressive cuts in public spending, they will simply exacerbate Scottish nationalist aspirations and this will eventually make more credible the claims of the SNP that the welfare state is only safe in their hands.

Parenthetically, the irony of the last few years is that the only reason there has been any recovery at all is because the British government was unable to implement the fiscal austerity that it preached in June 2010 just after it was elected. Since 2010-11, spending has risen by some £32 billion, while total central government revenue has risen by £61 billion meaning the fiscal deficit has fallen by only £29 billion. The increased tax revenue is mostly being driven by the growth that the continuing large deficits have been supporting. Had the last government’s initial plans been realised, then the fiscal position would have killed the recovery stone dead and probably ensured a Labour victory yesterday.

As it happens, the recovery has been a weak Keynesian-style one. It would have been much better if they hadn’t tried to cut the fiscal deficit at all. Then the UK would have enjoyed a much more robust return to economic growth, but the “recovery”, such that it was, likely proved sufficient to shift floating voters back into the Tory fold.

And instead it is Labour, which has much soul-searching ahead. Out-“fiscalled” on the Left by the SNP, which promises a more robust welfare state for Scotland, thereby supporting many of its traditional voters to support the Scottlish Nationalist Party, and harmed in England via the party’s ideological incoherence, promising austerity AND “radical change”, Labour is now in no-man’s land. It will stay there and could well do worse, if Canada’s Liberal Party is anything to go by. Overall end, a good night for the UK Tories, but over the longer term, a potential great night for Scotland’s nationalists.

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